Australia Lowers Growth, ANZ Profit Warning

123jump.com Staff
06 Feb, 2009
New York City

Reserve Bank of Australia lowers its annual economic growth forecast from 1.5% to 0.25% in the current fiscal year. The RBA continues lag with the global market development and forecasted growth in the economy when global economy is sharply decelerating. ANZ warns that first half profit drop of 15%.

[R]3:00AM New York, 7:00PM Sydney - Reserve Bank of Australia lowers its annual economic growth forecast from 1.5% to 0.25% in the current fiscal year. ANZ warns that first half profit drop of 15%.[/R]

Australian market averages rose 1.2% after Reserve Bank of Australia announced today conditions of extreme financial and monetary markets volatility have abated. The central bank also said the recent fiscal and monetary interventions will help insulate the economy from the global economic contraction.

Commodity stocks rose as metal prices rallied.

In Sydney trading ASX 200 index gained 1.2% or 41.3 to 3,469.90.
Of the ASX 200 index stocks, 117 increased, 71 declined, and 12 were unchanged. Commonwealth Property Group led advancers in the index shares with a rise of 13.6% followed by Macarthur Coal increasing 11.5%.

Reserve Bank of Australia Cuts Growth Forecast to 0.25%

Reserve Bank of Australia reported today in its statement of monetary policy that it forecasts the economy to expand at 0.25% in the current fiscal year from the 1.5% estimate made in November last year.

However the economy is expected to grow 1.25% in the fiscal year ending in March 2010.

The non-farm sector in the economy is projected to post flat yearly growth of in the June quarter this year and increase 1.25% a year after.

According to the central bank, extreme volatility in the markets has abated in the past two months and the functioning of the credit markets has improved.

The statement notes that the Australia has been more insulated from the turbulence on the global financial markets than other advanced economic because of the efficiency in the transmission process of rate cuts to borrowers and a favorable adjustment in the exchange rate.

Over the past year the exchange rate has depreciated by 20% in trade-weighed terms. The RBA also noted that the current monetary policy setting """"is providing significant stimulus to the economy.""""

National Australia Bank Provision for Bad Debt Rises

National Australia Bank reported today that the group charge for bad and doubtful debts increased to A$824 million in the three months to December.

The specific charge was A$521 million, half of which is related to three companies totaling A$303 million.

The NAB said the group raised A$12.3 billion in term wholesale funding, which is 60% of the full year requirement of A$19 billion.

Gainers & Losers

Commonwealth Property Group led gainers in the ASX 200 index shares with a rise of 13.6% followed by increases in Macarthur Coal of 11.5%, in Mirvac Group of 11.4%, Kagara Ltd of 10.8%, and Babcock & Brown of 0.6%.

Commodity stocks gained as gold prices advanced $12 to $914.20 per ounce and crude oil prices gained 80 cents to 41.20 per barrel.

Futuris Group led decliners in the ASX 200 index shares with a fall of 20.6% followed by losses in Paperlinx Ltd of 11.8%, in Virgin Blue Holdings of 8.9%, in PMP Ltd. of 8.4%, and Macquarie DDR TR of 8.3%.

ANZ Issues Profit Warning

ANZ announced in a response query to the Australian Stock Exchange that its first half profit may drop 15% on increased provisions and derivative risks.

The lender said the mark to market charge for credit risk on derivatives occurred in the second half last year.